Federal Sentencing Guidelines Amendments Part II: Economic Crimes

Ed. Note: This week, the U.S. Sentencing Commission’s 2009 Amendments to the federalSentencing Guidelines went into effect. Once a week this month, we will post an analysis of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2009 amendments is available here.

Identity Theft Amendments

Congress directed the Sentencing Commission to increase the penalties under several of the identity theft statutes in Title 18. In response to that directive, the Commission added a new enhancement and a new upward departure provision, as well as expanding the definition of “victim” and the factors to be considered in calculating the amount of loss.

The new enhancement is located at §2B1.1(b)(15). It adds two levels if either of two prongs is met: (A) where the offense involved an offense under 18 U.S.C. § 1030 (fraud in connection with computers) and intent to obtain personal information, or (B) where the offense involved unauthorized public dissemination of personal information. The (A) prong was formerly a part of the computer crime enhancement, which has been redesignated as §2B1.1(b)(16).

The new upward departure is an amendment to §2H3.1 (Interception of Communications; Eavesdropping; Disclosure of Certain Private or Protected Information.) It explains that an upward departure may be warranted where an offense involved the personal information or means of identification of a substantial number of people.

The Commentary to §2B1.1 is amended to expand the definition of “victim” for purposes of the victims table at subsection (b)(2). Under the amendment, “victim” includes persons whose means of identification was taken and used, but who was fully reimbursed by a third party, such as a bank or credit card company. It only covers victims, though, whose information was actually used.

The amendments also change Application Note 3(c), regarding calculation of loss, in two ways. (1) Where property is copied, rather than taken, the estimate of loss may be calculated based upon the fair market value of the copied property. (2) In cases involving proprietary information, the estimate of loss may be calculated based upon the cost of developing the information or the reduction in value of the information resulting from the offense.

In this post in May we discussed Flores-Figueroa v. U.S., a Supreme Court case in which the Court held that aggravated identity theft requires the government to prove that the defendant knew that the means of identification that he or she used, transferred, or possessed actually belonged to another person. We discussed the case again in August in this post, when the Eleventh Circuit applied it in U.S. v. Gomez. An amendment to Application Note 1 of §2B1.1 clarifies that for information to be considered “personal information” it must involve information of an “identifiable individual.”

The amendments also clarify Application Note 2(b) of §3B1.3 (Abuse of Position of Trust or Use of Special Skill) to include defendants who exceed or abuse the authority to issue or transfer means of identification.

Counterfeiting Amendments

The Sentencing Commission resolved a split in the circuits regarding whether offenses involving “bleached notes” should be sentenced under §2B5.1 or §2B1.1. “Bleached notes” are genuine U.S. currency that has been stripped of ink and re-printed to appear as a high denomination note.

In U.S. v. Inclema in 2004, the Eleventh Circuit held that, because such notes are altered, they should be sentenced under §2B1.1. The amendments change this rule, specifically providing for bleached notes to be sentenced under §2B5.1. The Commission explained that technological advances in counterfeiting “have rendered obsolete the previous distinction in the guidelines between an instrument falsely made or manufactured in its entirety and a genuine instrument that is altered.”

Intellectual Property Amendments

In response to Congress increasing the maximum sentences for violations of 18 U.S.C. § 2320 (Trafficking in counterfeit goods or services) where the offender causes or attempts to cause serious bodily injury or death to 20 years or life, respectively, the Sentencing Commission amended the enhancement at §2B3.5(b)(5) (Criminal Infringement of Copyright or Trademark.)

The amendment brings the two-level enhancement into parallel with §2B1.1(b)(13) by clarifying that the guideline also applies when the offense involved the risk of death and increasing the minimum offense level to 14.

Housing and Economic Recovery Act Amendments

Congress created two new offenses in the Housing and Economic Recovery Act of 2008. The Commission refers 12 U.S.C. § 4636b to 2B1.1 and 12 U.S.C. § 4641 to 2J1.1 and 2J1.5. Other similar statutes were referred to the same statutes.

Section 4636B criminalizes working for regulated entities in certain capacities after the Federal Housing Finance Agency has prohibited it. The Commission explains that it is similar to an economic crime and thus best accounted for by reference to §2B1.1. This testimony by the Chair of the Federal Defender Sentencing Guidelines Committee describes the unsuitability of the chosen guidelines for these new offenses.